Investing 101
1:10
What is Passive Investing? | Passive Investing Explained
In this video, Titan's Emily Cherkassky explains passive investing and how a "set it and forget it" mindset can still result in gains.
Video Transcript
Passive investing is a strategy for investors who want long term exposure to markets without frequent trading. For most investors, this means investing in an index fund such as the S&P index fund. With a "set it and forget it" mindset. These investment returns are generally stable, but can be slow for some investors. Gains are never guaranteed, but on average, the S&P has posted high single digit annual returns after adjusting for inflation. When you think about it, passive investing is a can't lose strategy if you're measuring yourself against the index performance because your performance will effectively be the index performance.
There are, however, potential downsides when you passively invest you're exposed to bear markets and recessions. Additionally, passive investments don't allow you to take advantage of opportunities that may come from shorter term market moves or trends because you're just invested in the index. Choosing between passive or active investing doesn't have to be an either or decision. For many people, it's a blend of both and depends on your investment style, tiime horizon and risk tolerance. At the end of the day, it's totally up to you.
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